ECB Delivers Back-to-Back Rate Cuts as Eurozone Recession Looms
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Daily Currency Update
The European Central Bank (ECB) has taken decisive action to counter a sharp slowdown in the eurozone economy, implementing its first back-to-back interest rate cuts since the 2011 euro crisis. With Germany teetering on the edge of recession and inflation falling across the 20-member currency bloc, the ECB followed its September rate cut with another 0.25 percentage point reduction, bringing the deposit rate to 3.25%.This third cut of the year is likely to weaken the euro, as lower rates reduce the appeal of euro-denominated assets, potentially driving investors toward higher-yielding currencies like the US dollar or others.
Key Movers
The dollar is on track for its third consecutive weekly gain, supported by strong US economic data and a dovish European Central Bank. This has led markets to delay expectations for US rate cuts, with additional uncertainty stemming from the potential for a Donald Trump presidential victory.The stronger dollar is putting pressure on the euro and other major currencies, as investors adjust their positions to reflect a prolonged higher interest rate environment in the U.S.
Expected Ranges
- GBP/USD: 1.3015 - 1.3095 ▲
- GBP/EUR: 1.2015 - 1.2065 ▲
- GBP/AUD: 1.9405 - 1.9495 ▲
- EUR/USD: 1.0785 - 1.0865 ▼